Counterfeit check fraud schemes target U.S. law firms

03/12/12—The IC3 continues to receive reports of counterfeit check schemes targeting U.S. law firms. The scammers contact lawyers via e-mail, claiming to be overseas and requesting legal representation in collecting a debt from third parties located in the U.S. The law firms receive a retainer agreement and a check payable to the law firm. The firms are instructed to deposit the check, take out retainer fees, and wire the remaining funds to banks in China, Korea, Ireland, or Canada. After the funds are wired overseas, the checks are determined to be counterfeit.

In a slight variation of the scheme’s execution, the victim law firm receives an e-mail from what appears to be an attorney located in another state requesting assistance for a client. The client needs aid in collecting a debt from a company located in the victim law firm’s state. In some cases, the name of the referring attorney and the debtor company used in the e-mail were verified as legitimate entities and were being used as part of the scheme. The law firm receives a signed retainer agreement and a check made payable to the law firm from the alleged debtor. The client instructs the law firm to deposit the check and to wire the funds, minus all fees, to an overseas bank account. The law firm discovers after the funds are wired that the check is counterfeit.

Law firms should use caution when engaging in transactions with parties who are handling their business solely via e-mail, particularly those parties claiming to reside overseas. Attorneys who agree to represent a client in circumstances similar to those described above should consider incorporating a provision into their retainer agreement that allows the attorney to hold funds received from a debtor for a sufficient period of time to verify the validity of the check.

True crime examples include:

This Charleston law firm reported being “scammed” out of $390,000 with this type of scheme. Other law firms in the area report similar methods of being approached. These cases were tracked to Japan, Canada and Nigeria.

The Attorney General of Michigan offers this information on counterfeit check fraud schemes, which targeted not only law firms but individuals, mystery shoppers, and hotels.

The California Bar Journal provides this article and warns that not only could the law firm be “on the hook” for the outstanding funds with the bank due to a counterfeit check scheme, but that they could possibly come under investigation by the California State Bar Association and how scams like this damage a law firm or attorney’s reputation.

One variation on the counterfeit check cashing scheme involves an alleged attorney in another state requiring a law firms assistance in your home state. The Better Business Bureau offers up this advice regarding that type of scam.

Whether you are a law firm, mystery shopper or every day Joe or Jane, it’s important to do your homework. Check the facts thoroughly in any email message you receive. If it’s from some unknown person and offers you or asks you to do something that seems too good to be true it probably is. Look for simple mistakes in spelling, grammar and punctuation to help indicate that it is a fake offer.

If you have been a victim of an internet scam or have received an e-mail that you believe was an attempted scam, please file a complaint at www.IC3.gov.